Apple's huge sum of cash and investments continues to grow, reaching $81 billion during the company's fourth quarter of fiscal 2011, it was revealed on Tuesday.

Apple's cash pile would have been even larger were it not for two major expenditures last quarter: Apple's acquisition of Nortel patents, and a legal settlement and licensing agreement with Nokia.

The iPhone maker's cash and investments have continued to grow every quarter for the company. For example, two years ago, Apple had $31.1 billion in cash and investments.

During Apple's quarterly earnings conference call, Chief Financial Officer Peter Oppenheimer went out of his way to note that a majority of Apple's cash and investments -- about two-thirds -- are held overseas. His mention of it was particularly interesting because Apple has backed a proposed tax holiday that some U.S. corporations have lobbied the government to enact.

Apple is among a consortium of companies, including Cisco, Duke Energy, Oracle and Pfizer, who are pushing for a one-time tax break on an estimated $1 trillion held by corporations in overseas accounts. Those companies currently face a 35 percent tax on any profits they generate outside of the U.S.

Under the proposed plan, companies would benefit from a temporary tax break with a tax rate of just 5 percent in a one-year period. The companies have said they could justify the tax break by investing the funds in research, hiring and other domestic spending that could benefit the U.S. economy.

Analysts participating in Tuesday's call attempted to get an answer out of Chief Executive Officer Tim Cook on whether Apple would use the cash for a shareholder dividend or stock buyback. But Cook sidestepped those questions and instead stated that the company would continue to do what it felt was best for Apple with its cash.

Apple Chief Executive Tim Cook.

He noted that Apple has made a number of key acquisitions over the years, but that the company is typically frugal with its money. For example, it was Apple's acquisition of Siri in April 2010 that led to Siri voice technology in the iPhone 4S, while the purchase of Quattro Wireless in January 2010 helped lay the groundwork for Apple's iAd mobile advertising network for iOS devices.

However, Cook did note that he does not have a hard-and-fast rule that Apple should have great sums of cash and investments, or even any at all. He said that's unlike many other aspects of business, where he does have a strong opinion on what should be done.

BTW. Why is Apple paying so much more tax then Google/MSFT?
24.7%
Google 22%
MSFT 7%

That's a great question, and I am sure that poking around the respective companies' financials will provide the answer.

I am going to take a lazy approach and surmise (): I surmise that Apple had far fewer employee option exercises (i.e., employees are holding on to their options expecting further stock price growth), thereby getting fewer tax credits from the US government.

Tim Cook is gay, believes in climate change, and cares deeply about racial equality. Deal with it (and please spare us if you can't).

I anyone else sort of uncomfortable that corporations can horde money like this?

No, they've earned it under the system they have been given to work in, so it's theirs to do what they wish with.

That said, I do believe one of the problems with the trickle down theory is that it allows situations whereby money can be held not doing anything (NB: I acknowledge that much of Apples money will be invested in something), which I'm not convinced is helpful to the economy overall.

I don't know how to fix it though (i.e. I'm not sure what would be better).

I think the most practical thing would be to own their own manufacturing plant. Apple already create the software, manufacture the microchips and own a massive data center. Building a manufacturing plant would be another step of control and profit for them. It would also add another level of security and limit exposure to ethical work treatment issues. It also would cut their dependency on Foxconn. I'm sure they could get tremendous incentives from other Asian countries to open up shop there.

Now having said this it would not be a easy task as Foxconn knows Apple secrets and I heard its subsidiary is opening a bunch of Apple stores in China. Buying Foxconn is probably not a option either. One potential solution is a joint venture. Anyway thats my thought. Buying patents is always good too.

I think the most practical thing would be to own their own manufacturing plant. Apple already create the software, manufacture the microchips and own a massive data center. Building a manufacturing plant would be another step of control and profit for them. It would also add another level of security and limit exposure to ethical work treatment issues. It also would cut their dependency on Foxconn. I'm sure they could get tremendous incentives from other Asian countries to open up shop there.

Now having said this it would not be a easy task as Foxconn knows Apple secrets and I heard its subsidiary is opening a bunch of Apple stores in China. Buying Foxconn is probably not a option either. One potential solution is a joint venture. Anyway that’s my thought. Buying patents is always good too.

Welcome to AppleInsider.

Apple got out of the manufacturing business a while ago (~2000?) and it has helped create tremendous profits for the company. The new CEO, Cook, was an important part of the move to, and success of, outsourcing manufacturing. It is very unlikely Apple will return to it anytime soon. However anything is possible for the most creative large company. Who would have expected a major PC maker to get into retail?????

Another issue is that the tools and facilities required to manufacture even Apple's huge quantities of components are hugely expensive (what is Samsung's 28 nm fab in Texas costing to build?) and will serve Apple's needs for only a few years. Thus it would be very difficult for Apple to recover the sunk costs in such a facility. For example, the fabs producing the 45 nm A4 chips (which has only been in production for ~20 months) may only have a year's worth of work left for Apple. Now, Samsung can use those older fabs to produce chips for low-cost Android phones and the like, but what would Apple possibly ever use them for? If Apple owned the fab they could lose a ton of money abandoning a very expensive facility that Apple can't use anymore.

The money needs to be HERE.
The factories that build their products need to be HERE.
There needs to be NO TAX BREAKS for companies putting their own interest over the country's.

See a pattern here?

The tax break is to bring the money TO the US so that they can create jobs.
BTW: Apple is a global company that have more sales outside US. Why should US have all the Jobs? At least Apple is an American company that pays 24.7% tax + create 40K jobs.

To many people support Google, Android and MSFT. Buying Samsung/HTC just export American jobs. MSFT pays only 7% tax.
Tell your Android friends to stop supporting those companies and support Apple.

BTW: If Apple bought South Korea and gave it to North Korea: US could withdraw all its troops from South Korea. US would save 10+ billion on this.

Apple should take some millions out of the many billions that they have and open up an awesome, world class Apple Museum, in some place important like NYC to start.

Especially since Steve Jobs is no longer here, it would preserve Apple's and Steve's legacy and an Apple museum would be the first of it's kind anywhere in the world! It would be huge, it would be state of the art and it would house every single product ever made by Apple!

It would also have a special section for unreleased prototypes and it could be located next to the Apple flagship store on Fifth Ave in NYC. This store is already one of the most photographed tourist attractions in New York. If there was an Apple Museum, it would be constantly be packed with people! I'd rather go and look at some secret old Apple prototypes that never got released instead of a bunch of dinosaur bones and other dead things, but that's just me.

The money needs to be HERE.
The factories that build their products need to be HERE.
There needs to be NO TAX BREAKS for companies putting their own interest over the country's.

See a pattern here?

Samsung's 28 nm fab in Texas, which certainly is costing billions to build, will reportedly manufacture the A6. Apple doesn't have to own the factory for the components to be Made in the USA.

Note that the highest value part in the iPhone/iPad will be made in the USA by people making good wages, and will be shipped to China for assembly at Foxcon by workers making $2/hr. I don't think we want those jobs.

It's part and parcel of capitalism. What would you have them do with it?

Ummm invest it? Give it to the owners? Lower margins for market share? Just to name a few.
Jobs let it be known to save for a rainy day and not be held to standard wall street idiology(see above). Which is ok too. But how much is too much? With this much cash, IMO, they are both powerful and vulnerable.

Hokey religions and ancient weapons are no match for a good blaster by your side, kid.

Ummm invest it? Give it to the owners? Lower margins for market share? Just to name a few.
Jobs let it be known to save for a rainy day and not be held to standard wall street idiology(see above). Which is ok too. But how much is too much? With this much cash, IMO, they are both powerful and vulnerable.

I would appreciate an explanation for how their cash makes them vulnerable.

I assume you aren't talking about a hostile takeover to get at the cash, as least not at current market cap. I expect nobody in the world can come up with the ~$400B (?) it would take to acquire Apple and get at their cash.

However, if the rainy day that Apple is saving for ever comes, and their market cap drops to half or $200B, and they have $100B in the bank, hmmmm.

Apple got out of the manufacturing business a while ago (~2000?) and it has helped create tremendous profits for the company. The new CEO, Cook, was an important part of the move to, and success of, outsourcing manufacturing. It is very unlikely Apple will return to it anytime soon. However anything is possible for the most creative large company. Who would have expected a major PC maker to get into retail?????

Another issue is that the tools and facilities required to manufacture even Apple's huge quantities of components are hugely expensive (what is Samsung's 28 nm fab in Texas costing to build?) and will serve Apple's needs for only a few years. Thus it would be very difficult for Apple to recover the sunk costs in such a facility. For example, the fabs producing the 45 nm A4 chips (which has only been in production for ~20 months) may only have a year's worth of work left for Apple. Now, Samsung can use those older fabs to produce chips for low-cost Android phones and the like, but what would Apple possibly ever use them for? If Apple owned the fab they could lose a ton of money abandoning a very expensive facility that Apple can't use anymore.

Apple got out of manufacturing since they where a small company.
Now they are the third largest computer company and one of the biggest mobile device company in the world. Its a risk, but having own factories is always better for many reason.

The outsourcing craze in late 90 early 2000 have lead to so many companies loosing money. Its just short term thinking to boost the shares so that the CEO can get a bonus when they outsource. Out sourcing means that another company also needs to make profit.

The interesting thing is that Apple have taken small steps to design things in-house. The A class processor is an Apple design with ARM cores / PowerVR graphics. This have given Apple a huge edge over all other Android vendors. A5 is 30% larger/more expensive to manufacture then for example the Tegra2. These 30% Apple use for NEON SIMD/Visual engine/DSPs and dual channel memory.
Tegra2 does not have it. Since Nvidia needs to make a profit on Tegra they sell it for 25 dollar. Apple does not need to make a profit on A5, so they can manufacture it at 25 dollars.

The latest evidence that out sourcing is bad is AMD. AMD sold its factories for a shot time cash injections. Now Global foundries is killing AMD. GloFo can't produce enough Liano and have huge problems producing any Bulldozers. GloFo does not care about AMD. If AMD don't buy the wafers, someone else will. Therefore GloFo have no self interest in making AMD chips work.

We also have the backstabbing companies like Samsung. Apple helped Samsung build its factories. The famous 1 billion in Flash 2005. Apple buys Samsung parts for over 8 billion and are their largest customer. Was that enough for Samsung? No. They used many of the same parts and the same design to create its own competing products. That would never have happened if Apple had its own factories. Samsung also leaked iPhone/ipad parts to competitors.

FoxConn is an own chapter. Same factory that produce Apple stuff in the morning, produce Dell stuff in the evening. During the night they allegedly produce pirated Apple parts. (thats why pirated Apple stuff is 1:1 copies).

The only reason why all factories can't be in the US is because of the insane tax system. I don't want to go down in a political discussion. I think we can agree that an American worker is as good as a Chinese worker. The main reason why its cheaper to manufacture outside US is that those countries have 6-7% tax on average. US have 30. EU 45. My country have 56% (and 85% tax on "rich" people making more then 50K USD/year)

With high taxes, everything gets more expensive. To cover that expense, we need higher wages. Its a bad circle.

It is also strange that not one single American I have meet wants to cut down on US biggest expense: the military. US is to god hearted and wants to help to many people in the world. Think about your self!

So: Apple should build its own Foundry to make SSD/A class CPUs.
Assembly plants can also be in the US, but needs to have advance robot technology to keep down cost.

Nokia made 10 of billions on mobile phones that cost under 100 dollar. Why? They had their own factories. The new idiotic Nokia CEO have empty factories and buys Windows mobile phones from Korea = Rip Nokia.

Apple got out of manufacturing since they where a small company.
Now they are the third largest computer company and one of the biggest mobile device company in the world. Its a risk, but having own factories is always better for many reason.

The outsourcing craze in late 90 early 2000 have lead to so many companies loosing money. Its just short term thinking to boost the shares so that the CEO can get a bonus when they outsource. Out sourcing means that another company also needs to make profit.

What I have been trying to say (maybe not very clearly) is that Apple wants to use cutting-edge technologies and components in every single product. Apple would have no use for a fab that is only a few years old. By outsourcing to companies that can find other, profitable uses, for these older facilities and machines, Apple can have access to the newest technologies without the financial and management burden of owning the older plants.

Thus Apple can be very nimble, and through their huge volume orders get access to suppliers' latest and greatest stuff.

Somehow Apple is doing it right, unlike AMD. Perhaps your analysis is wrong, and it isn't so simple as you describe?

The money needs to be HERE.
The factories that build their products need to be HERE.
There needs to be NO TAX BREAKS for companies putting their own interest over the country's.

See a pattern here?

Yes, the pattern is that so many of the AI whiners don't have any concept that the economy is now global. Apple is not a U.S. company - they are a true global enterprise. They sell more than half of their products outside the U.S., so revenues and profits are generated there.

In fact, the very fact that their 'outside the U.S.' cash is growing so fast indicates that sales outside the U.S. are growing rapidly. The only way Apple would stop generating 'foreign' cash is if they stopped selling outside the U.S. - which would be insanely stupid.

Quote:

Originally Posted by boeyc15

Ummm invest it? Give it to the owners? Lower margins for market share? Just to name a few.
Jobs let it be known to save for a rainy day and not be held to standard wall street idiology(see above). Which is ok too. But how much is too much? With this much cash, IMO, they are both powerful and vulnerable.

Apple has done very well with my investment in their stock for the past 15 years. I trust them to handle my money and invest it where they think it can best be used. The minute I no longer believe that, I'll sell the stock.

It's not up to you to decide what Apple should do with the money - that's the Board's job. Your only role is to decide whether to buy their stock or not.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

The money needs to be HERE.
The factories that build their products need to be HERE.
There needs to be NO TAX BREAKS for companies putting their own interest over the country's.

See a pattern here?

Quote:

Originally Posted by JONOROM

Samsung's 28 nm fab in Texas, which certainly is costing billions to build, will reportedly manufacture the A6. Apple doesn't have to own the factory for the components to be Made in the USA.

Note that the highest value part in the iPhone/iPad will be made in the USA by people making good wages, and will be shipped to China for assembly at Foxcon by workers making $2/hr. I don't think we want those jobs.

Precisely (minus the laughing). It's a misconception that many have in the developed world that desirable jobs are being lost to the developing world and ruining the manufacturing industries. High value manufacturing still takes place in the US and Europe. The CPUs are made here, the designs are drawn up here etc. Only the low value work of machining a case etc is outsourced abroad. Workers in the US would never work for the wages that workers in China, India and Mexico will. It's not as immoral as it seems. In these countries, what the likes of Apple and Nike etc pay for manufacturing low-value commodities is a more valuable wage.

People will queue up for jobs in these factories. Economically, these places are like Dickensian England where people expect unskilled work and don't expect the modern lifestyle that many of us do. It's not pretty, but it's the way economies work. There's nothing any of us can do about it. Apple can't change the global economic position of half the world population. If Apple don't send work to China, the workers in China won't have those jobs and they'll either earn nothing or work in another factory on the same money. They won't suddenly start earning $7 an hour at some other job because they weren't forced into a job at a factory. Jobs that pay that well simply don't exist in these counties for the majority its of the labour force, the economies aren't developed enough yet. Their economies depend on these manufacturing jobs.

It's how economies evolve. As they grow, the low value work is done by the less developed economies. Nobody weaves cotton in the NW of England any more. Instead, the English keep high-value service jobs and let less rich economies do the work they no longer want to do. If Apple opened an iPhone assembly plant in Bolton on Chinese wages, nobody would apply for a job there. If they paid minimum wage, the iPhones would cost twice as much, nobody would buy them and Apple would shut the factory down. It's nobody's fault, it's just economics.

Simply put, Apple can't bring these jobs back to the US, and you wouldn't want them to.

Quote:

Originally Posted by boeyc15

Ummm invest it? Give it to the owners? Lower margins for market share? Just to name a few.
Jobs let it be known to save for a rainy day and not be held to standard wall street idiology(see above). Which is ok too. But how much is too much? With this much cash, IMO, they are both powerful and vulnerable.

How does having $80b make them vulnerable? I agree, it is silly not to invest it, but people make the assumption that Apple can invest it. Investing it for the sake of investing it is madness. The things they'd like to invest it in might not be allowed. Apple are the second largest company in the world now, the government won't just let them buy any company they choose. Giving the money to investors would be very nice though lol

Yes, the pattern is that so many of the AI whiners don't have any concept that the economy is now global. Apple is not a U.S. company - they are a true global enterprise. They sell more than half of their products outside the U.S., so revenues and profits are generated there.

In fact, the very fact that their 'outside the U.S.' cash is growing so fast indicates that sales outside the U.S. are growing rapidly. The only way Apple would stop generating 'foreign' cash is if they stopped selling outside the U.S. - which would be insanely stupid.

Apple has done very well with my investment in their stock for the past 15 years. I trust them to handle my money and invest it where they think it can best be used. The minute I no longer believe that, I'll sell the stock.

It's not up to you to decide what Apple should do with the money - that's the Board's job. Your only role is to decide whether to buy their stock or not.

Nice thought but Apple isn't a person. It's a company with a duty to its shareholders. Any philanthropic deeds must be approved by the board and shareholders, I'm sure, or else you'd see shareholder lawsuits aplenty.

The only reason why all factories can't be in the US is because of the insane tax system. I don't want to go down in a political discussion. I think we can agree that an American worker is as good as a Chinese worker. The main reason why its cheaper to manufacture outside US is that those countries have 6-7% tax on average. US have 30. EU 45. My country have 56% (and 85% tax on "rich" people making more then 50K USD/year)

If you think that taxes are the only reason that it's cheaper to build a factory overseas, you're kidding yourself. Just a few factors:

1. Taxes - as you've indicated. However, the difference is not as great as you claim. While China as a 'paper' tax rate in the single digits, by the time you get done paying all the fees and so on, it's far higher.
But taxes are only a minor component. US labor rates are 1000% higher than China - not just a few percent. Other reasons:

2. Corporate liability costs

3. Employee overhead costs (insurance and other benefits

4. Environmental costs

5. Health and Safety costs

6. And the big one is simply employee expectations. A Chinese worker is happy to take home $100 per month after taxes. A US worker expects at least 10 times that AFTER TAX.

"I'm way over my head when it comes to technical issues like this"Gatorguy 5/31/13

If you think that taxes are the only reason that it's cheaper to build a factory overseas, you're kidding yourself. Just a few factors:

1. Taxes - as you've indicated. However, the difference is not as great as you claim. While China as a 'paper' tax rate in the single digits, by the time you get done paying all the fees and so on, it's far higher.
But taxes are only a minor component. US labor rates are 1000% higher than China - not just a few percent. Other reasons:

2. Corporate liability costs

3. Employee overhead costs (insurance and other benefits

4. Environmental costs

5. Health and Safety costs

6. And the big one is simply employee expectations. A Chinese worker is happy to take home $100 per month after taxes. A US worker expects at least 10 times that AFTER TAX.

It ain't expectations, it's necessity.

Both the quality of life AND the cost of living (and thus what people and companies earn and pay in taxes) is much higher in the USA than in China. Even our democratic system costs more than an "efficient dictatorship" like China's government.

And our high quality of life is almost certainly a good thing that we have chosen as a society to support and pay for. We can argue about the details but in general we live well in the USA, and most of us are willing to pay for it so long as we can get a decent job.

And assembling iPhones at Foxcon for $2.15 per hour would NOT be a decent job in the USA.

I don't see why Apple has to do anything different from what they are doing. The company is running very smoothly and they're making about as much money as any company can. Just because Wall Street can manipulate Apple's share price that isn't Apple's fault. There are some very powerful funds that are controlling what's going on with Apple's share price and probably a number of other stocks as well. They can do anything they want. But what matters most with Apple as a company is to just keep selling products and make as much money as they can. Apple continues to make more revenue and profit and reserve cash. The hedge funds can't control that. Only the consumers can. If the stock market is crooked then only the regulating bodies can change that.

I doubt that Apple will be making any changes soon unless some fantastic acquisition opportunity comes along. Apparently, Apple doesn't want to compete directly against companies like Google or Amazon because they don't feel its necessary. Apple could acquire a search engine but I guess it doesn't fit in their plans. Apple will just have to keep on piling up revenue quarter after quarter and become a powerful company like no company ever was. Pleasing shareholders are probably the least of Apple's concerns. I'm rather disappointed with today's results, but Apple's share price may just spring back up in a couple of weeks and all will be OK.